April 15 isn’t this month’s only tax deadline

An April to-do list

April is the height of spring — and a total financial drain. Do you know how many different tax-related payments you have to make this month? Let’s take a look at them all.

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Individuals face the following costs:

Fund your IRA or Roth IRA. April 15 is the very last day to fund it to get the benefit of a deduction (or contribution) for 2012. If you have limited dollars and can’t fund everything, fund this. But only if you’re sure you’ll have enough to cover all the other things on this list before the final filing and/or payment deadlines.

Your first-quarter estimated tax payment for 2013 is due on April 15. Make this payment. Why is this so important? Should you find yourself in dire straits come October, you may need to request an installment agreement from the IRS (or state) – or even an offer in compromise. The only way these agencies will agree to help you is if you’re in compliance for the current year. What does that mean? It means folks who have jobs have adequate withholding for 2013; and folks who are self-employed or living on investment or retirement funds have made all their estimated tax payments. When the tax collectors see that you aren’t even trying to comply in the current year, you’ll get no breaks from them. They simply start collections actions.

The final balance on your 2012 taxes is due on April 15. Remember, putting your tax return on extension gives you more time to file. In theory, it’s not designed to give you more time to pay. The truth is, once you have an extension, the late payment penalties and interest are much lower than the average credit card rate. So, pay something with the extensions for the IRS and your state. Believe it or not, this is your least significant concern — as long as you can raise the money to pay 2012’s taxes before Oct. 15, 2013.

Speaking of extensions, if you’re not ready to file your tax return (or to pay it), file that extension immediately. If you have income (wages or partnership K-1 income) from more than one state, be sure to file extensions with each state, as well.

Then there are those people who run businesses or are self-employed. You have an additional set of deadlines this month:

Quarterly payroll taxes are due on April 30. It’s always easier to deal with this financial burden when you’ve been depositing the payroll taxes right after the payroll is issued. You never need to worry about getting into the habit of dipping into the withholding funds to carry your business. Then, when you file your quarterly reports, you’ll have little or nothing to pay. (What if you don’t have the money to cover this? Find a way to borrow or raise the money soonest. There are heavy late payment penalties. And even heavier enforcement actions when you ‘steal’ the money from an employee’s paycheck and don’t pay the government. The IRS will chase after any and all responsible parties, company owners, sometimes even bookkeepers or banks. This is debt that cannot be bankrupted. It will follow corporate officers and shareholders of closely held corporations — even if they were not involved in the decisions or the funds. )

Sales taxes returns are also due on April 30 if you file monthly or quarterly. Some smaller businesses get away with filing semi-annually or annually. Sales taxes are getting more complicated these days with businesses selling online and using affiliate programs. When you have people selling or referring your products on their sites in exchange for a commission, you may have established nexus in their state. From the state’s perspective, that may mean you must register your business with the state and collect and pay sales taxes. (It gets more complicated than that, once you get started.) As more states are subscribing to this concept, there are organizations like the Performance Marketing Association fighting to protect your business from this intrusion.

Partnership tax returns must be filed by April 15. This applies to LLCs filing as partnerships, as well. However, even though the tax returns are not ready, the K-1s must be sent to partners. When you send them out, make sure the cover letter warns them that these are not the final numbers — and tell them when you expect to send out the real K-1s. (This is a lot like the rule brokerages must follow requiring them to send you those useless 1099s at the end of January.) It’s important that you do this — especially if you ultimately end up missing the filing deadline on September 16. Why? Because there are some pretty hefty late filing penalties on partnerships (and S Corps), based on the number of partners and the number of months. They can only be forgiven if the partners received their K-1s on a timely basis.

Aside from monetary needs and filing deadlines, what else should be on your April to-do list?

It’s time to review your pay stub for the current year. Even if all your paychecks are deposited electronically, you can still log in and look at your pay stub. In fact, you must. Look for these things:

Do you have the correct state withholding? People keep writing to TaxMama asking how to deal with last year’s tax filings when their company withheld state taxes for a state they had left early in the year. It’s easier to fix that problem right now.

Is your withholding correct? Too often people scream when they prepare their tax returns and find that they owe thousands of dollars. But, they complain, “I told the payroll department to withhold more!” Don’t just rely on them to follow your instructions. Read your own paystub early in the year to make sure that they did.

Do you have deductions for things you don’t understand or didn’t authorize? If there is anything you don’t understand, ask now. There is still time to stop charitable contributions you don’t want to make.

Perhaps you want to change your union affiliation to “fair share” instead of being a full member. Or you did that last year. Remember to notify your union and your payroll department of your non-membership each year. In situations where your employer collects the full dues, subject to repayment by the union, make sure you file the requisite paperwork to get your excess dues reimbursed to you by the union.

OK, those are enough tasks for April. Let’s give you a breather until May.

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